18 Companies on Dividend Death Watch

by: David Fish

I recently wrote that “One nice thing about compiling the Dividend Champions list of companies that have paid higher dividends for at least 25 straight years (which can be found here: http://dripinvesting.org/Tools/Tools.asp ) is that I get to see which companies are nearing the anniversaries of their previous dividend increases. Since most of these firms raise their payout about the same time every year, we can say with some confidence that they are likely to do so again.”

The flip side of that coin is that I also get to see which companies are in danger of being deleted because they have gone too long without an increase. Although companies can remain on the list even without an increase in the current year (as long as the total dividends exceed what was paid in the prior year), the fourth-quarter declaration can spell the end of the line for some firms. Consequently, I'm watching the following companies for possible deletion if they fail to announce an increase before year-end. (Dates in parentheses are the Pay Dates of their last increases and length of streak).

Teleflex Inc. (NYSE:TFX) (6/13/08) Recent yield: 2.5%. (31 years)

Washington REIT (NYSE:WRE) (6/30/08) Recent yield: 6.3%. (38 years)

BancorpSouth Inc. (NYSE:BXS) (7/1/08) Recent yield: 4.9%. (25 years)

Illinois Tool Works (NYSE:ITW) (10/14/08) Recent yield: 3.0%. (45 years)

Bank of Hawaii (NYSE:BOH) (11/28/08) Recent yield: 3.7%. (30 years)

Community Trust Bancorp (NASDAQ:CTBI) (1/1/09) Recent yield: 4.8%. (28 years)

AFLAC Inc. (NYSE:AFL) (3/2/09) Recent yield: 2.6%. (27 years)

Eli Lilly & Co. (NYSE:LLY) (3/10/09) Recent yield: 5.9%. (42 years)

Integrys Energy Group (NYSE:TEG) (3/20/09) Recent yield: 6.2%. (51 years)

In addition to these nine Champions, nine Contenders (15-24 years) are currently on “death watch.” One company (Arthur J. Gallagher (NYSE:AJG)) has already announced an unchanged fourth-quarter dividend and been deleted.)

Holly Corp. (HOC) (4/2/08) Recent yield: 2.3%. (16 years)

Wolverine World Wide (NYSE:WWW) (5/1/08) Recent yield: 1.7%. (15 years)

First Financial Bankshares (NASDAQ:FFIN) (7/1/08) Recent yield: 2.8%. (23 years)

Washington Trust Bancorp (NASDAQ:WASH) (7/11/08) Recent yield: 4.9%. (16 years)

Paychex Inc. (NASDAQ:PAYX) (8/15/08) Recent yield: 4.8%. (20 years)

Martin Marietta Materials (NYSE:MLM) (9/30/08) Recent yield: 1.9%. (16 years)

Courier Corp. (NASDAQ:CRRC) (11/28/08) Recent yield: 6.9%. (15 years)

Park National Corp. (NYSEMKT:PRK) (12/10/08) Recent yield: 5.8%. (20 years)

Progress Energy (PGN) (2/2/09) Recent yield: 6.3%. (21 years)

Obviously, not all of these companies will fall by the wayside. (Many haven't even announced their third-quarter dividend yet.) But if all of these companies failed to increase their payouts by the end of 2010, then the Dividend Champions list would be reduced to 93 companies (with the anticipated “graduation” of Brady Corp. (NYSE:BRC) and McCormick & Co. (NYSE:MKC) from the Contenders roster) and the Contenders list would be reduced to 68 companies. I'm gathering information on several dozen “pre-Contenders” (Pretenders?) that have increased their dividends for at least a dozen years, so the rosters will be replenished in the future by other companies, and I still believe that many of the Contenders will graduate to Champion status. Not all companies meet the strict standards of some investors, but they may be appropriate for portfolio diversification. As always, potential investors should do due diligence before committing funds.

Disclosure: Author owns ITW and AFL among 28 Champions and PAYX among 11 Contenders.